Senator FAWCETT (South Australia) (14:47): My question is to the minister representing the Minister for Defence, Senator Bob Carr. I refer the minister to this year's budget, which saw a cut to Defence spending in real terms of around 10 per cent, taking government spending on Defence as a proportion of GDP down to 1.56 per cent, the lowest level since 1938. There is now widespread concern about the impact these cuts will have to fund Defence Force 2030, outlined in the 2009 Defence white paper, or even to sustain the existing force. Is the minister aware that the government is in the process of hollowing out Australia's Defence Force and does he understand why the Secretary of the Department of Defence said in a recent speech to the Australian Strategic Policy Institute that the 'maxim about matching dollars to strategy must perpetually ring in our ears'? Can the minister explain to the Senate why this government has been unable to retain the service of Major General Duncan Lewis—one of the most competent individuals ever to hold the appointment—who has resigned today after only one year in the role?

Senator BOB CARR (New South Wales—Minister for Foreign Affairs) (14:48): What a research capacity they have got on the other side of the House. The speech that is the core of the question, the speech being unveiled to the Senate today, was given on 23 August. The speech by Duncan Lewis was presented to ASPI on 23 August. In the speech he said explicitly that Australia's Defence spending was appropriate and that our recent budget decisions on Defence were made in the context of governments around the world, including those of the US and the UK, cutting defence spending more than Australia had done. In any case—

Senator Ian Macdonald: Mr President, I raise a point of order similar to the one I raised last week. Do you rule that it is in order for speakers to turn their backs directly to you in your role as President? Is that within standing orders?

The PRESIDENT: There is no point of order.

Senator BOB CARR: The speech was entirely consistent with government policy. Indeed, it elaborated on government policy. The speech was entirely an expression of government policy. As a result of the recent budget and the commitment—

Senator BOB CARR: Well, it was presented here as a revelation. A speech given on 23 August was presented as a revelation. It is the first time it has been raised in the Senate. The fact is that most savings being made in the Defence portfolio are being achieved by deferring Defence acquisitions and adjusting the Defence capital equipment program, but also by delivering further operating efficiencies. There will be no adverse impact on operations—they are all fully funded. There will be no adverse impact on military numbers in the navy, army or air force. There will be no adverse important implications for kit for forces about to be deployed or in deployment. There will be no reductions in conditions or entitlements for servers— (Time expired)

Senator FAWCETT (South Australia) (14:51): Mr President, I ask a supplementary question. I refer the minister to the fact that during the recent keel-laying ceremony of the air warfare destroyer, the Labor government announced further cuts to Defence spending under the guise of smoothing work for industry. Does the minister recognise that the Gillard government in fact has created gaps in workflow through their recent budget decisions and deferrals? Does he understand that the one-year extension will not even come close to bridging the gap in ship-building work, given the government's procrastination over the last three years in making a decision on the future submarine project?

Senator BOB CARR (New South Wales—Minister for Foreign Affairs) (14:52): On the contrary, projects to be progressed in 2012-13 include the replacement of Caribou transport aircraft; the approval of the Growler airborne electronic attack capability, which only we and the United States will have, that is how advanced it is; the acquisition of medium and heavy trucks; and upgrades to Orion maritime patrol aircraft, C130J aircraft and Anzac class ships. A number of projects will be progressed to enhance the availability and capability of the current Collins class submarines. The government have also approved $214 million for further detailed studies and analysis to inform the government's decision on the design of Australia's next submarine. Continuing to approve new projects to enhance ADF's capability will remain an important focus for government over the upcoming financial year.

Senator FAWCETT (South Australia) (14:53): Mr President, I ask a further supplementary question. Can the minister confirm that a Collins class submarine is out of the water in South Australia at the moment, with work not able to be conducted for months to come due to a lack of funds? Can the minister explain how this represents a smoothing of industry workflow? How does it represent support for industry to retain a skilled workforce? How can the Australian people trust Labor to fulfil any of their commitments to provide adequate funding to retain the critical capabilities and people needed for Australia's national security?

Senator BOB CARR (New South Wales—Minister for Foreign Affairs) (14:53): We are proud that Australia is constructing three air warfare destroyers—based on a proven design from the Spanish navy. When complete, the destroyers will be amongst the world's most capable warships. The air warfare destroyer project has just passed a significant milestone—the keel laying ceremony for Hobart, the first of the destroyers—marking the start of the consolidation phase of the project. Two keel blocks are now joined on the hard stand at the common-user facility in Adelaide. From this point on—

Senator Fawcett: Mr President, my point of order goes to relevance. I asked the minister to confirm that a Collins class boat is currently out of the water with no funding to actually complete the work, not about the air warfare destroyer.

The PRESIDENT: The minister has 24 seconds. I draw the minister's attention to the question.

Senator BOB CARR (New South Wales—Minister for Foreign Affairs) (14:54): All I would say about the Collins class submarines—

Senator Abetz interjecting—

Senator BOB CARR: Mr President, I will seek advice on whether a Collins class submarine is out of the water. Let me put the question in context. The government have no intention of allowing a gap in any capability as important to Australia's security. (Time expired)